J&J wants a piece of Merck/Schering action

We hear Johnson & Johnson is twisting a few arms at Schering-Plough. The Financial Times quotes sources close to the talks, saying that J&J is prepping for a legal challenge to Schering's "reverse merger" with Merck. It might back off of that challenge, the sources say, provided it gets control of the Remicade joint venture or other, lesser concessions.

J&J and Schering share the revenues from the arthritis blockbuster Remicade and have joint rights to a potential successor drug. Apparently to avoid triggering provisions that would give J&J control of both meds if Schering were taken over by another company, Merck and Schering have agreed to combine in a reverse merger. On paper at least, Schering would buy Merck, and then the combined company would adopt the Merck name.

So J&J could cry foul over the deal structure. Or it could mount a counterbid for Schering--or at least threaten to do so. Or it could agree to back away slowly, with a bigger share of Remicade & Son. "I don't think this will result in nothing out of J&J--they're going to assert their rights and create leverage," one dealmaker told the FT, adding that he expects J&J to try to cut a deal with Merck and Schering behind the scenes if at all possible. 

Analysts have been predicting some action from J&J, given that Remicade is such a big seller. And they've been predicting that J&J wouldn't jump in with a counterbid. Maybe this middle road is the company's answer. We'll see how Merck and Schering respond.

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